Duplex hack in San Diego

5 Replies

Hi everyone

New to the forums, and real estate investing. Just finished reading Brandon Turners book and working on a house hack in here in SoCal. 

We are in escrow for a Duplex in South Park right now. We are going to live in one side and operate the other as a STRO. Paying the transient tax is the big thing for now, permit required starting July of next year, from what I understand.

Just wanted to reach out and see if anyone has some wisdom to share on this type of thing? Im sure we are going to learn a lot, but would like to keep the first timer mistakes to a minimum! 

Thanks so much for any help guys 


-Phil

Originally posted by @Phil Reason :

Hi everyone

New to the forums, and real estate investing. Just finished reading Brandon Turners book and working on a house hack in here in SoCal. 

We are in escrow for a Duplex in South Park right now. We are going to live in one side and operate the other as a STRO. Paying the transient tax is the big thing for now, permit required starting July of next year, from what I understand.

Just wanted to reach out and see if anyone has some wisdom to share on this type of thing? Im sure we are going to learn a lot, but would like to keep the first timer mistakes to a minimum! 

Thanks so much for any help guys 


-Phil

You seem to be aware that in July STRs are limited to 1% of an area (excluding Mission beach). The existing good actors (those already paying transit tax and with few neighbor complaints) will get priority. I suspect South Park either is already at or over the 1% and that there may be no new STRs available. This implies you need a backup plan in case you do not get an STR permit. This backup plan could be furnished rentals of over 30 days or traditional long term rentals.

Next is STRs are a fair amount of work to manage.   In addition to the constant tenant turnover, there are the various correspondence/questions and the need to immediately address various issues (the number of less than stellar reviews we have for downed WI-FI is not insignificant). 

Either be prepared for this work or hire professional management.  

2020 was a rough year for STRs in San Diego due to Covid. STRs were banned from March to June and from prior to Thanksgiving through the new year. Hopefully that is a once in a lifetime event, but you never know. Our STR income still has not reached 2019 levels.

My belief is that unless you are very confident at getting a coveted STR permit that it may not be worth attempting the STR route. Furnishing a unit, finding a PM or placing on AirBnB or VRBO, and building positive reviews only to have it potentially end in July seems like a lot of effort for a short period of STR.

 Good luck

Dan thanks for the great reply!

My thought was to use the next year to build good standing with the city while we can, and hope for the best in July

The property still pencils out for us if we have to do a long term rental on the other side, (ie very cheap mortgage for us in a great neighborhood) but there's a lot more potential profit, obviously, if we get to run the STR

And thanks for mentioning the WiFi, that never crossed my mind. If South Park is already at its 1% is there going to be a waitlist or something? Seems like that kind of info is trickling out right now 

@Dan Heuschele - Hey Dan! I'm new to rentals and looking to rent out the ADU on my property here in SD. You mentioned that a backup plan could be a furnished rental of over 30 days. Newbie question here, but is there a platform like AirBnb for that type of rental, would I use AirBnb, or would I manage it like a traditional rental?

Originally posted by @Robyn Banks :

@Dan Heuschele - Hey Dan! I'm new to rentals and looking to rent out the ADU on my property here in SD. You mentioned that a backup plan could be a furnished rental of over 30 days. Newbie question here, but is there a platform like AirBnb for that type of rental, would I use AirBnb, or would I manage it like a traditional rental?

 Both, there are sites like funrnishedFinder that specialize in 30+ day furnished rentals and  AirBNB also lists units with minimum of 30+ day stays.

Note I have never used a 30+ day rental (either as provider or tenant).  

I looked into them briefly for a unit that I was considering a traditional STR until next July and then 30+ day rental after that (when San Diego's STR quota goes into effect). We already have a duplex STR in Mission Beach and in city of San Diego you can only have one STR after July 31 which I hope a married couple each get one. So we will not be able to apply for an STR permit even if Pt Loma is not already at the 1% quota.

Our existing STRs (Mission Beach duplex) have been used as STRs since 1999 (before AirBnB or VRBO). They are in an area that is virtually all STRs. They have been professionally managed the entire time. It seems absurd that they could be affected by the STR quota (not the 1% quota because the quota does not apply to Mission Beach, but by the one STR rule).

Good luck

Dan that sounds pretty frustrating, considering you’ve been running a good business for so long. I hope the city is considerate for those circumstances. Sounds like you’ve got some great properties by the way.

For anyone following this, I emailed the city’s STRO department with a few questions and they were actually really responsive and helpful. can’t link it here, but it’s on the San Diego website